Carbon Tax Now, or Carbon Tax Later? Some Say It’s Just a Matter of Time

In the five months since Washington voters rejected I-732, a revenue-neutral carbon tax initiative, there have been three separate bills introduced in Olympia that put a price on carbon emissions. The first came from Gov. Jay Inslee, who included a carbon tax in his budget proposal to help fund K-12 education; a second was sponsored by Sen. Steve Hobbs, which also puts some carbon taxes toward schools; and a third was introduced by Rep. Joe Fitzgibbon, which proposes using carbon tax revenues to fund clean energy, water, and forest projects, among other things.

And this week, at the eleventh hour, there’s a fourth: Sen. Guy Palumbo, a freshman Democrat from Snohomish County, has been scurrying to cross the T’s on his $15-per-ton carbon tax bill before the official end of the session, on April 23—“to put it out there, air it out, have people look at it before it’s just the budget writers” in the statehouse, he says. It officially dropped on April 20.

Since Palumbo (and most everyone else) fully expects the gridlocked legislature to go into at least one or more rounds of overtime to pass a budget that fully funds public education, any revenue-related bill is likely to be fair game until the bitter end. Palumbo predicts that could be late June.

So far, the two budget proposals introduced in the House and Senate have a gigantic gap between them. More revenue is still needed to fix McCleary. And Palumbo believes that the best chance of closing that gap—the best chance of passing a budget that works for both parties, both houses of government, and that creates enough funding for public schools—is a carbon tax.

“I think basically of the options that are out there,” he says, “a carbon tax absolutely has a better shot of passing, just vote-wise, than any of those other options.” A capital gains tax, for instance, part of the Democrats’ budget proposal, simply won’t get “a single Republican vote… You physically can’t pass it, even if you wanted to.”

There have been many points of contention regarding a carbon tax in Washington. One of the sharpest, which played out during Carbon Washington’s I-732 campaign, was whether or not it should be revenue-neutral (i.e. whether we should return the money to residents and businesses via tax cuts, or if that money should be used to fund renewable energy, climate impacts on low-income communities, and other related projects). When I-732 failed by an 18-point margin, some anti-carbon-tax interests may have seen that as a signal that Washington voters—who, unlike Seattle voters, tend to be allergic to tax hikes—will always vote down paying more at the pump.

To Palumbo, that’s delusional. “[Some business interests] took the wrong lesson from Carbon WA’s defeat,” he argues. “‘The people just turned down a carbon tax.’ That’s the wrong lesson to take out of that experience.”

What voters really rejected, he argues, was a carbon tax that was opposed by many major environmental, labor, and social justice groups and leaders, including Jeff Johnson at the Washington State Labor Council and even our greenest-governor Inslee—not just by the Koch brothers. From Palumbo’s point of view, the takeaway should be exactly the opposite: even with all of that opposition, the measure got a whopping 40 percent of the vote. “Now picture a better-crafted version of that bill, with all those people on board, and Tom Steyer writing a $20 million check… in a Trump-backlash year with the entire community galvanized for it,” he says. “That’s a totally different calculus… I think smart businesses get that.”

Palumbo has no doubt that, should nothing significant happen this session or next, there will be another carbon tax ballot initiative in 2018. “It’s a guarantee,” he says.

And yes, the Alliance for Jobs and Clean Energy, a coalition of labor, justice, and environmental groups, does have clear intentions to firm up its carbon-tax proposal and put it on the 2018 ballot — if, that is, nothing happens in the legislature. (The group is hiring right now, for instance, for a field director and a campaign coordinator.)

In the meantime, the Alliance heartily supports Fitzgibbon’s carbon tax bill, which it helped craft, and is “very involved in legislative discussion” around that and other carbon-tax options at play, says Washington Environmental Council president and Alliance member Becky Kelley. She, like Palumbo, predicts that “no puzzle pieces are off the table” yet when it comes to a final budget. “The Alliance is committed to moving forward on pricing carbon pollution” according to their principles, she says. “We want to get that done as soon as possible” — in whatever way possible. “We’re working with an eye to 2018.”

Carbon Washington has no intention of letting 2018 pass by, either. “I think smart people in both parties realize that a carbon tax is coming to Washington — it’s just a question of when,” says executive director Kyle Murphy. “There are multiple groups talking about a ballot initiative, including Carbon Washington. We just ran one, and we’re not shy about doing it again.”

Murphy says Carbon WA would not campaign against an Alliance initiative the way the Alliance campaigned against Carbon WA’s last year. But “if no one is doing anything, then we’ll do something,” he says. “We believe there needs to be substantial action on climate change by 2018. We’ll do what it takes to make it happen.” Meanwhile, though, “We’d all be better off if the legislature would be willing to help shape it.”

To that end, on Thursday, April 20, Carbon WA and nearly two dozen other groups, including Audubon Washington and Puget Soundkeeper, part of a coalition called ACT NOW (Advocates for a Carbon Tax NOW), are staging a lobby day in Olympia. Yes, “it might seem kinda late for a lobby day,” he admits, but the House Democrats and Senate Republicans have both introduced their budgets, and there’s plenty of conflict and no clear movement yet (and no carbon taxes). “It’s time to kickstart the conversation… We think that a carbon tax is a good opportunity for some bipartisan compromise.”

Palumbo is of the same mind. His bill is intentionally centrist in its approach; he says he’s been working with some members of the business community on it for a while, to figure out where industry interests draw the line, as well as where environmental groups do. “I really believe in what’s possible,” he says. “Let’s move the ball forward. What can we get done?”

One unique aspect of his bill is its approach to education funding: While some lawmakers and business interests oppose funding schools directly with carbon tax revenues, others are loathe to institute a tax that doesn’t somehow address the McCleary situation. His idea: Fund the school buses, which have everything to do with both carbon emissions and school funding (the state spends nearly $1 billion every two years on school buses alone). The proposal would tax carbon emissions by $15 a ton at first, growing to $30 over time; it would phase in some areas more slowly, including residential natural gas; and it would invest in renewable energy projects and forests and water, but exempt certain activities, like fossil fuel exports and some businesses, from the tax entirely, including “energy-intensive, trade-exposed” manufacturing businesses.

It’s anyone’s guess, at this point, what’s going to happen in the final budget scuffle.

But from Palumbo’s vantage point, a carbon tax could certainly be in the cards. And this, he says, is a real question that Washington’s business community needs to be asking: Do they want to get on board with a moderate, legislative compromise? Or do they want to “roll the dice” and wait and see how voters behave in 2018?

“There are a number of forward-thinking businesses,” he says, that “see the writing on the wall.”